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China And Hong Kong Trademarks. Think Puerto Rico.
2011-12-30 16:48:00
Just got back from a family vacation in Puerto Rico . While there, I saw a rental car company called "Target." This company had the same logo as the Target stores so common on the U.S. mainland. Well of course that got me to thinking. Is this rental car company infringing on Target (the store's) trade-name and trademark (the logo)?  Or is it the case that even though Puerto Rico is a U.S. territory, its trademark regime is separate from the United States? My research quickly determined that Puerto Rico's trademark regime is actually separate from that of the United States. In other words, if you want your name or mark trademarked in both the United States and Puerto Rico, you should register it in both places. Presumably, Target rental car beat Target stores to the name and logo in Puerto Rico and is now able to use both legally there.  Hong Kong and China are the same way. And Taiwan and Macau too. I am constantly having to explain this to our clients, at least half of w...

How To Change Your China Employer AND Keep Your Work Permit
2011-12-29 16:48:00
My law firm does not generally handle visa/work permit matters in China as it typically is not worthwhile to pay lawyer rates for this. The other day, I got an email from a loyal reader I know, asking me how she could go to work for a new China employer, without having to relinquish her existing work permit. I told her that I did not know how to do that and asked her to report back to me if and when she found out. This morning I got an email from her, very nicely setting out the steps one must go through to switch China employers while hanging on to a China work permit. Neither I nor anyone in my firm has confirmed that these are the right steps, but they certainly sound right to me. Here goes. The most important factor in keeping your work permit is getting a letter of release from your current/old employer company. Technically, as long as the employee has not violated its contract, the employer company is required to provide this release letter. However, as you can imagine, peopl...
More About: Change , Work

Economic Downturns. Bad for Foreigners. In China And Always.
2011-12-27 12:38:00
I am just returning from a delightful family vacation in San Juan, Puerto Rico, where we got around mostly by taxi. Both my kids speak Spanish fairly well and I am totally willing to fake it. One of the things I quickly learned from our conversations with the taxi drivers is that there is a big split between the Puerto Ricans and the Dominicans. We heard of this during our first day there, in our second cab ride. Our first cab ride had been from our hotel, with a very polite, very well spoken Dominican cab driver. Our second cab ride was from San Juan's old town, and this driver was a very young Puerto Rican, who made it a point to spend maybe the first five minutes of the ride lecturing us on the differences between Puerto Rican and Dominican cabbies. As we careened wildly through San Juan's streets, with the car radio blasting out Spanish hip-hop, he told us of how the Dominicans are all crazy drivers and how it is not even safe to get in their cabs. He then proceeded to make su...
More About: China , Economic

China Sucks At Football/Soccer. What Does That Tell Us?
2011-12-26 17:18:00
I am of the view that I can understand about 50% of a country by going into five of its grocery stores and by watching five basketball games of its best players. I have a friend who is a dancer and she says she can understand a country by watching its people dance. I know basketball and I know food, but I do not know soccer, but if I did, I am sure that watching soccer games would help me better understand a country as well. I mention this because a reader just sent me an Economist article, entitled, "Why China Fails at Football ," along with a note saying the following: China is never going to get its act together in football and for the same reasons, it's never going to get its act together in the big picture either.  They play football like they do everything else. Selfishly and by rote.  That works fine for factory work, but when it comes to innovation, it's worthless. The Economist also does not shy away from using soccer as a metaphor for China as a whole: Solvin...
More About: Soccer

Top Ten Asian Cities For FDI in 2012. China Snares Three.
2011-12-25 15:38:00
The Financial Times' FDIintelligence site [subscription required] just came out with its list of the top ten Asian cities for Foreign Direct Investment (FDI) in 2012 and three China cities made the list: Hong Kong, Chengdu, and Guangzhou. This ranking is based on data and expert opinion used to rank cities with the best prospects for inbound investment, economic development and business expansion in the upcoming year. Rank City Country 1 Singapore Singapore 2 Melbourne Australia 3 Hong Kong China 4 Brisbane Australia 5 Sydney Australia 6 Busan South Korea 7 Auckland New Zealand 8 Perth Australia 9 Guangzhou China 10 Chengdu China What do you think of this list? What do you think of the three China cities named? Why these three and not Dalian or Qingdao?
More About: Cities

Eight Trends To Watch In China's Luxury Sector
2011-12-25 08:58:00
Interesting (and blisffully short and to the point) PowerPoint on luxury goods over at the The China Observer Blog, entitled, "Eight Trends to Watch in China's Luxury Sector."  What I found most interesting about the eight trends is that none of them came as much of a surprise to me, and it is not as though I now much at all about luxury goods in China. The eight trends did not come as a surprise because they seem to show that China's luxury goods consumers are not all that different from luxury goods consumers in most of the rest of the world. A year or so ago I read an article (wish I could find and link to it) that posited that the elites in most countries around the world have a lot in common with each other and more than they do with the non-elites in their home countries. I buy that and this eight trends PowerPoint seems to be further proof of that. Do you agree?

Coming To Terms With China. A Simple Statement.
2011-12-24 14:08:00
Just read a post at the Entrepreneurship as an Adventure blog, entitled, "Coming to Terms with China ." This is a blog written by a young entrepreneur trying to make a go of running a small business in China. The blog is subtitled Entrepreneurship as an Adventure Sport and it is about exactly that: the adventures of running an entrepreneurial business in China. The "Coming to Terms with China" post starts out talking about how difficult it is to get used to China and how frustrating it can be. It goes into how commonly Chinese businesses engage in cheating, doubly so when foreigners are involved. Then it takes a saccharine turn (which is appropriate for the holiday season) and talks about how things are changing for the better in China business and provides some nice examples of that. Not gonna tell you this post is Hemingway-esque, but it is a good, heart-felt view of what China business is like right now and of how things are getting better.  I suggest you read it and let us k...
More About: Simple

How And Why To Do Your China Film As A Co-Production
2011-12-23 14:08:00
The following is a guest post by Robert Cain, who I met a few months ago at the US-China Film Co-Production Summit. Rob has worked for more than 20 years in Hollywood and in the global entertainment industry, primarily as a production, finance, strategy and creative development expert. He has been doing business in China since 1987, where his producing and entertainment management experience includes: Production of the TV broadcast Three Tenors in the Forbidden City Development and production executive on the 2008 Academy Award nominated film Mongol Consulting Producer on the film Shanghai Kiss starring Kelly Hu and Hayden Panettiere Consultant to Shanghai Media Group, CCTV, China Lion Films, and others For more on Rob's extensive film background, you can check out his full bio here. I also strongly urge anyone with an interest in China's film industry to check out Rob's Blog, ChinaFilmBiz. CLB has written frequently, as per the following posts, regarding China film co-product...

The China Slowdown And Extracting YOUR Assets/Product/Equipment/Molds
2011-12-22 12:28:00
I am in the process of writing an article for a leading publication on the things I am seeing that tell me China 's economy is cooling. The statistics from China seem to be saying everything is just fine, but man, all I can tell you is that my firm has been absolutely inundated with matters that tell me we are in the throes of a crash. The email I just received has become unbelievably typical over the last few months: Hi. I am an avid reader of China Law Blog. I run a small _________ company in Shanghai and have come upon my own situation in which I would like to ask for a legal opinion. It's not a very big issue and maybe not even worth pursuing it but since we are a very small company with limited funds it's still of relevance for us.A part of our business is renting out _________ machines to customers such as restaurants. One of these restaurants has just gone out of business. Since several months of rent are due to the landlord, the landlord has locked the shop down with all ...
More About: Product , Equipment

The Impacts Of China's Real Estate Crash. A Hard Rain Is Gonna Fall.
2011-12-21 12:08:00
This is part II of a series of an occasional series of posts we will be running here on what our lead China lawyer, Steve Dickinson, is seeing of China's real estate market, based on his living "on the ground" in Qingdao. Here it is: By: Steve Dickinson There are two types of real estate investor in China. The first are pure speculators who treat residential real estate as a source of value, far removed from its original residential use. These investors purchase multiple properties without bothering even to remodel the units for actual use. They are responsible for the spooky flats of empty condo buildings that have become so common in all of China's cities. The second are the normal citizens who purchase real estate as their primary residence. The high prices of the real estate bubble created by the speculators have created much pain for these normal home-buyers. Recent policies of the central government designed to contain the real estate bubble have been designed to benefit thi...
More About: Estate , Real Estate , Rain , Hard

China's Real Estate Bubble Has Burst. The View From Qingdao.
2011-12-20 12:38:00
By:  Steve DickinsonI have been engaged in a friendly debate with a number of economists about the date when the Chinese real estate market "bubble" will finally burst. The opinions of the economists vary. Some believe the bubble will never burst. Some project that the bubble will burst "sometime" in the future. The future date is usually something vague like 2013. The argument being that the Chinese government will not allow the bubble to burst until after its 2012 power transition.For the last year, I have been arguing that all of these projections are far too optimistic and since June I have been contending that the bubble has already burst. The serious work that needs to be done is not to project when it will happen, but rather to consider the impact on China of the fact that the collapse in the real estate market has already occurred.Recent events here in Qingdao (where I live) illustrate my point. Since June of this year, officially advertised prices for new residential r...
More About: Estate , Real Estate , The View , View

Seeking Genuine Apple Product From China? Go To Sanlitun.
2011-12-19 12:38:00
Just got my third email this week from someone who bought tens of thousands of dollars worth of "iPhones" from someone in China only to receive rank fakes. All three emailers were so blinded by the idea of buying iPhones at ridiculously low prices that they did nothing to make sure the sellers were legitimate, which of course they were not. There is just no way to get REAL Apple products from China for any less than you can get those products from the United States. There just isn't. If someone is offering to sell you an Apple product, be it an iPhone, iPad, MacBook Air, or anything else, for way less than you can get it elsewhere, it virtually has to be a fake or else you will never get anything at all. Get it through your head now: you ain't gonna get Apple products for less than anyone else does. It isn't going to happen. It just ain't. It is easy to buy Apple products at retail in China. You can buy them from the ever increasing number of Apple stores (if you are willing to ...
More About: Product , Genuine

China's Cutthroat Internet Competition. Foreigners Need Not Apply?
2011-12-18 19:08:00
About a year ago, veteran China journalist Chris Myrick wrote a very thoughtful and well-researched article on China internet competition for knowledge@Wharton. The article is entitled "Land-grab Mentality: The Cutthroat Competition on China’s Internet " and it discusses the increasingly hostile and legalistic competition between China's leading internet companies. I was quoted in that article and a friend of mine just wrote me today to say that he had seen it. His email caused me to read the article again and doing so caused me to have the following initial thoughts: It is, not surprisingly, an excellent article. I say, not surprisingly, because I have known Chris Myrick since his days as AFX's Beijing Bureau Chief and I think very highly of him. The article, written in December of last year, already seems woefully out of date, for reasons I will explain at the end of this post.   The article begins by describing the mano-a-mano competition that is China's Internet:...

Ancient China Business Scam. Back With A Vengeance This Season.
2011-12-17 08:48:00
As a China lawyer, I hate Decembers. I love them because they are always one of our firm's busiest months (which is true in spades this year), but I hate them because they are also the month when we get the most contacts regarding frauds and scams (which is also true in spades this year).  December is fraud month because that seems to be when Chinese companies seem to decide whether they plan to continue operating as a viable business or not and oftentimes those who choose "not," will decide at the same time to go out with all guns blazing. December is also a great month for consumer scams coming out of China. I hate getting the scam/fraud calls because 99 times out of 100, the best we can do for the caller is to tell them to be more careful the next time; it just does not make sense to pay a lawyer to chase a phantom.  Here is a composite of the latest one we have been seeing: You are a United States company that buys its product from China. You are really in a rush to g...
More About: Business , Season , Back , Vengeance

China And Its People. Just ONE Book.
2011-12-15 16:48:00
My firm is in the throes of defending a strike suit brought against Sea Shepherd by Japanese whaling interests. The Japanese whalers are seeking an injunction to stop Sea Shepherd. Under U.S. law, to get equity, one must do equity and one of the things we have learned about the Japanese whaler plaintiffs that we consider to be less than equitable, is that they have used nearly $30 million in tsunami relief money (I kid you not) to fund their whaling operations.  A young lawyer in my office was shocked that this would go on. Her shock stemmed not even so much from the fact that the funds would be used so deceptively, but more so from the fact that it seems never to have occured to the whalers that using tsunami relief funds to kill whales would be viewed with such horror by just about everyone outside Japan. I told her of how a friend of mine who is completely fluent in Japanese and lived there a long time is always telling me of how the average Japanese businessperson knows not...
More About: People , China , Book

Drafting A China Manufacturing Agreement. Watching The Sausage Get Made. Pa
2011-12-15 08:58:00
Yesterday, I did a post, entitled, "Drafting A China Manufacturing Agreement. Watching The Sausage Get Made ," seting out many of the questions we typically ask our clients before we begin drafting their OEM agreements. A reader, Phil,  left us the following comment to that post: Can I ask about the wording of your agreements in Chinese? A deal I'm involved with has been running into a lot of trouble because the American law firm who wrote our contracts have written them in highly complex legalese, very different to the language of Chinese law and standard Chinese contracts. In the third tier city where we are trying to operate, our partner and potential collaborators are having real trouble just reading and understanding the documents. (I'm a translator, and I'm reasonably sure that both sides are right on this - the contracts are correct, but they really are very difficult to read.) How does your firm walk the line between the conventions of English (American) lega...

China's Candle Production. Nothing Is Static.
2011-12-14 15:48:00
You can blow out a candle But you can't blow out a fire Once the flames begin to catch The wind will blow it higher Oh Biko, Biko, because Biko Yihla Moja, Yihla Moja -The man is dead And the eyes of the world are watching now watching now From the song, Biko, by Peter Gabriel, 1980 How is your business? Though I very much welcome your comments, I am probably not going to run many/any of them on this one.
More About: China , Production

Drafting A China Manufacturing Agreement. Watching The Sausage Get Made.
2011-12-13 21:08:00
I love it when a blog post just lands in my lap, and one just did. It is a couple of emails from two of my firm's lawyers to two different clients, both of whom recently retained us to draft OEM Agreements for production of product by factories in China . Both clients are in the process of changing their Chinese manufacturers and this time around they want a strong and enforceable supplier agreement with their new Chinese manufacturer. I am doing this post to give an idea of some of what should go into a Chinese manufacturing agreement. Since we have a fairly standard initial questionnaire we send to our clients when we being working on China OEM manufacturing agreements, I have combined the two emails into one, further camouflaging the companies involved. Here are the questions posed by the emails: What is the name and contact information of the Chinese manufacturer? What sort of products will the Chinese manufacturer be making? Do you anticipate that these products will change...
More About: Sausage , Made , Watching

China Business (Huawei) Puts Money Over Politics. Hmmmm.
2011-12-12 20:38:00
Very interesting Wall Street Journal article on how Huawei Technologies Company, China 's hugely successful telecommunications- equipment maker, will be scaling back its dealing with Iran. I see this as a potentially very important milestone in that it seems to indicate that in some circumstances, even Chinese companies widely believed to be "tight" with Beijing will place their profits over politics. One case does not a trend make, but most trends do start with one. What do you think?
More About: Politics , Business , Money

A Complete Guide To China's High-Speed Rail.
2011-12-12 12:38:00
Train aficionado, David Feng (and author of China Travel 2.0), recently wrote a very helpful piece for CNNgo on China's high speed rail, entitled, "A complete guide to China's high-speed rail: Four expert tips and 5 top lines travelers shouldn't miss." If you will be traveling on China's high-speed rail or even if you are just contemplating doing so, I recommend you check out David's piece.
More About: Guide , Speed , High , Rail

China Housing Prices. Everything Is Relative.
2011-12-11 20:48:00
Got the above graph from a China Tells post, entitled, "A Comparison between China and US housing Prices."  The post seems to make the argument that housing prices in China are not so high, especially when we compare them with those in the United States: Is China's housing price expensive? Depends. Expensive is always a relative concept. This chart compares the housing price in a lot of Chinese cities to that of the United States, and it seems that the housing prices in two countries are quite similar.  Whoa, whoa, whoa. I think this reasoning is horrible. I agree that prices are relative, but what they are really relative to is incomes and on that score there is a huge difference between China and the United States and it is on that score that I have thought China real estate has long been over-priced. In fact, many years ago, my law firm looked into buying a firm condo in Qingdao, China. At that point, one of our lawyers was living in a very nice condo for which we w...
More About: Housing

Film Production In China. SARFT Makes Life Better.
2011-12-11 05:22:00
One of the things we have learned in representing companies involved in China 's film industry is that it is the theater owners who seem to make the most money from films shown in China. But Just last week China's government film agency mandated that the share of film ticket sales be lowered for theater owners. In a post entitled, Beijing’s (Bloodless) Boxoffice Battle, Rob Cain (whom I had the pleasure to meet last month at the 2011 US-China Film Co-Production Summit), writes of this change and how it came about. Producer Zhang Weiping had demanded that China's theater owners raise their minimum ticket price from 35 y to 40 yuan and lower their after-tax share of ticket sales from 57 percent to 55. Cain described Zhang's reasoning as follows:Zhang was looking to protect the nearly $100 million that’s been invested in The Flowers of War, his latest collaboration with his mega-director partner Zhang Yimou. The film, which stars Christian Bale, is the costliest...
More About: Life

Service In China. Good Luck With That, Part II.
2011-12-10 21:28:00
The Seeing Red in China blog has a really funny post on service (actually the lack therof) in China, entitled, "Don't expect customer service in China." The post starts out describing a role playing game the blogger had his Chinese students play where one student was the hotel manager addressing the complaints of the hotel guest. It went something like this: Guest: I’m sorry, but there is a mouse in my room, can you take care of it? Manager: I don’t see any mouse in here. Why are you lying to me? Guest: I’m not a liar. It’s under the bed, I just saw it. You should give me some discount for the room. Manager: I knew it, you just want me to give you back some money. There is no mouse! My hotel is very clean! You are trying to cheat me! Guest: No! You are cheating me! Manager: GET OUT OF MY HOTEL! Now if you have never been to China, you are probably thinking that something like that could never happen in real life. But if you have been to China, you are p...
More About: Service , Part , Good

China Law Blogs Here To Stay.
2011-12-10 08:38:00
Surprised and honored by a post over at the Associate's Mind Blog (a terrific blog, BTW, written by a neophyte lawyer out of Birmingham Alabama). The Post is entitled Law Library of Congress Archiving Blawgs and it told me something I did not know: The Library of Congress maintains an archive of what it has apparently deemed to be the top legal blogs and that list includes CLB: I went in expecting to find only things like the Harvard International Law Journal (which I did), but I was also pleasantly surprised to find regular blogs, such as China Law Blog, Simple Justice, The Trademark Blog, and others included. There are even a couple Canadian blogs included as well. It’s a nice resource when/if some legal bloggers decided to hang up their hats. The full archive is here. In addition to our blog, Stan Abrams' China Hearsay also made the cut and so too will live forever. Near as I can tell from my quick review, the list of the 100 or blawgs that are being saved for arch...
More About: Blogs

The China Premium. Fake Prestige Sells Tickets.
2011-12-09 12:28:00
Spoke with a client the other day, who for reasons that will soon become apparent, I am not going to name. This company makes a mid-line consumer product that sells for approximately $150 in both the United States and in China . Its sales in China had been okay, but nothing inspiring. Then he hired a marketing guru who told him that the company needed to vault its product into the luxury category and it should do so by changing the colors of the product (from mostly silver and blue to mostly black and gold) and double the price and give it a new name "made up to sound prestigious and old-line." The company did this and within months, its China sales had doubled and its profit margins had shot through the proverbial roof. Is this a one shot lucky thing, or is this going to be true of lots of other products as well? Let me just say that there is no way in hell that I would pay $300 for this product and I would not have even believed there would be a luxury market for it.  What is ...
More About: Tickets , Fake

FIle Your Trademark In China. Now.
2011-12-09 06:38:00
Every few months or so, I see something that reminds me of how important it is to file your trademarks in China before anyone else does. I often tell clients that filing a trademark is about the only China legal no-brainer. Or as I said in a post from earlier this year, entitled, "China: Do Just One Thing. Trademarks," if you do nothing else to protect your company in China, register your trademarks. Apple Computer is learning the importance of being first to file a trademark in China. Apple just lost a lawsuit in China against Proview Technology over ownership of the iPad name. Proview Technology filed a trademark for the iPad name in China back in 2000 so my initial reaction to the lawsuit was that Apple had zero chance of prevailing. China is a first to file country, which means whoever files for a trademark first (with only a few rare exceptions) gets it. Turns out the case is not so simple in that Apple's claim was actually based on a 2006 contract it had with Proview to buy t...
More About: File

The Sentencing Of Matthew Ng. A Very Long "No Comment."
2011-12-08 06:58:00
We have many times written of the risks foreigners face of being found on the wrong side of China's criminal laws. I cannot emphasize enough the need for foreigners to take China's criminal laws seriously. My firm has helped oversee a number of criminal cases in China involving foreigners in China and I cannot tell you how tired I am of hearing our clients confidently (at least initially) seek to assure us that they will be fine because what they were doing helped bring jobs and money to China. We are always emphasizing that China will, with little or no compunction, jail foreigners who violate China's criminal laws, even if the offending action is not a crime back in the home countrty.  And forget about getting much help from your embassy beyond maybe some help in finding your lawyers and seeking to monitor your case for procedural fairness.  I am writing of criminal law today because I was contacted by a couple journalists seeking my views on the recent 13 year jail s...
More About: Long , Comment

An Introduction To China Aviation.
2011-12-06 16:08:00
Christopher Jackson has written this guest post. Chris co-owns and runs Jackson Rosenberg, a boutique China aviation consultancy that provides consultancy and advisory services on China aviation matters. Before that, Chris worked at AVIC, China's state owned aviation conglomerate. Chris is fluent in Mandarin and he currently lives in Beijing. I asked Chris to write this post because my firm has a number of companies in the aviation business (mostly involving Eastern Europe) and pretty much all of them are very interested in China. During my last trip to China, I had the opportunity to speak for a long time with Chris and with one of Chris's aviation clients (with a well-known airplane manufacturer) about aviation in China and I was riveted. One of the things I learned is that the Chinese aviation authorities virtually always err on the side of safety as opposed to the side of moving more passengers quickly. I view aviation as one of China's great opportunities and I have been bug...
More About: Aviation , Introduction

Should China Kill The Electric Car? A Study in Capital Misallocation.
2011-12-05 12:38:00
I know I have been writing too much lately regarding China 's economy and I know that much of what I have written has been negative. But I have to tell you that I am starting to see all sorts of fissures breaking out in China's economy and they are scaring the hell out of me. I am not writing to jump on any bandwagon (as one e-mailer accused me) but because I am really worried.  I am worried not just from what I am seeing, but because the real economists out there (not the people who claim to be economists just because they live in China) are also saying some pretty scary things. One of those real economists, Michael Pettis, just came out with what I see as a brilliant piece on how China has overinvested in capital and how its capital investments have been misallocated. It is entitled, "How do we know that China is overinvesting" and I strongly urge you to read the whole thing. I love Pettis's piece for three reasons. One, I have never bought into the idea that a bunch of gen...
More About: Study , Electric

A Chinese Brothel Scam. Don't Let It Happen To You.
2011-12-04 16:19:00
It happened again last week. Multiple calls from the same person, wanting to speak with me urgently, yet refusing to provide any information to our receptionist on the nature of his issue. I eventually called this person back and here's pretty much what we discussed (which was essentially what I have heard from two other callers in the last 6-8 months or so): Caller:  I've never done this before and I feel terrible. Me:  Done what? Talk to a lawyer? Caller:  Gotten that kind of massage. Me:  Okay. But why are you calling me? Can we start at the beginning?  Caller:  They took my passport and said that I would never be able to enter the country again unless I paid them USD$4000.  I didn't have that money so I went to an ATM over the next few days and kept paying them and I had the rest sent to me by Western Union. Me:  Wait a second. Can we please start at the beginning. I am totally confused. Caller:  I went to get a massage. I was tir...
More About: Chinese